It’s been almost three weeks since Spotify pulled Victory Records catalogue of songs in a dispute over $23,000 in royalty payments to Another Victory, the Publishing Arm of Victory Records.

The Victory Records founder has stated in an email that somehow “found its way to the press” that if Victory’s catalogue of songs is not placed back on Spotify soon, with their histories and stream counts as they were, he would be forced to lay off staff and drop artists.

All the action is in streaming and that is where the artists need to be. The music business has undergone a revolution where a “hit song” is something people listen to forever and ever, not something which they buy once.

Adele’s figures of 1.1 million first week sales for her new single are impressive and news worthy. There is a limited supply of Adele music and she has a universal “mainstream” appeal (by the way all of the Eighties Hard Rock bands had this mainstream appeal with the backing of a cultural juggernaut in MTV). This in turn makes demand for her music very high.

As appealing as the first week numbers are, they are just numbers. A lot of the times the real hits are “slow burners”.

To use books as an example, Dan Brown’s “Angels and Demons” his second book, sold only 98 copies in its first week. It wasn’t until his fourth book “The DaVinci Code” which sold hundreds of millions that “Angels and Demons” got a second wind to the tune of about 40 million copies.

Five Finger Death Punch’s debut album only moved a couple of hundred copies when it came out. Within a few years it was certified “Gold” and it is still selling, almost 8 years later.

Def Leppard’s “Hysteria” was out for 12 months before it got a second wind on the backs of “Love Bites” and “Pour Some Sugar On Me”.

However, the tides of change set forth by the customer show that streaming is the way forward. Labels like Victory Records collect between 25 and 50 percent of their digital income from streaming services.

This whole saga highlights so many wrongs with the music business;

Lack of transparency

Bad data collection

The length of copyright terms means that heirs of the artists (kids, grandkids, step kids, business partners, lawyers, accountants, etc.) are “songwriters” of the song and they should be paid.

Who actually should be paid?

Missing money (about 25%) to songwriters due to all of the above not being met.

Artists selling away their copyrights to the labels for an instant pay-day (advance) and then the record label keeps all monies earned as “recoup costs” (charged expenses like recording costs, marketing budgets, advances) that the artist needs to pay back.

Who is the rights holder? The artist or the record label and/or publisher? Because it is the rights holder who is receiving the 70%. If a writer or artist isn’t seeing the money, the answer to their question can probably be found within their label or publisher contract.

But when artists are in control of their own copyrights with a lot fewer people in between, guess what happens. They actually make money if their music is listened too.

One song can earn a decent amount to the songwriter if there are fewer hands in the cookie jar. In the link, the take away line is that 10,929,203 streams on Spotify has resulted in royalty payments of $56,329.35 to the rights holder, which in this case is the artist and songwriter. If one song has been streamed that many times, by default, other songs from the artist will be streamed and the article talks about another song earning $37,000 from 11 million streams.

The consumers have made their choice that streaming has a future.

It’s time for artists to wake up and be smart about their choices when it comes to signing away their most valuable asset, their “COPYRIGHT”.

What happens to the pool of money when more people start to adopt a streaming service?

You see, when more people are listening (either to ad-supported free or subscription services), more money is generated. The higher the amount of money generated, the better the payouts.

What did the music industry have before streaming?

They had the iTunes store and the record labels were still hoping that people would go back to buying CD’s. Otherwise, there was a lot of copyright infringement which led to $0 in income.

So in comes streaming via YouTube at the lowest entry point.

Free for the customer.

The aim of the service is easy. Get millions upon millions of people to use it.

Streaming is a disruptive technology. YouTube demonstrated this and in its early beginnings it didn’t care about copyrights at first. Remember back in 2007 when Viacom sued YouTube for $1 billion, because they claimed that YouTube was nothing more than a piracy site. Sort of like how the VCR was nothing but a piracy tool by the MPAA, or the MP3 player. Yet, all of these services, once they had a chance to grow proved to be a profitable tool for the entertainment industries.

So from YouTube, other streaming services enter the market. They all pay the record labels a license to have music on their service. Freemium was enabled to compete and kill off piracy.

Every stream (regardless if it’s on the free platform or the subscription platform) generates a royalty payment back to the labels. The more people who stream, the bigger the dollars going back to the record labels, copyright collection agencies and the publishers.

If freemium goes away, it doesn’t mean that people will start to pay again. Sort of like how people stopped to pay $18 for CD after Napster and in the process, killed off Tower Records and other brick and mortar shops.

The recording business side of music has already hit rock bottom.

Now the only way is up.

Recorded music revenues are increasing due to the monies coming in from streaming services.

Our move to an on demand culture means that streaming has won.

There will always be the 10% who will never pay for anything. But 90% would. Sometimes they will pay more, sometimes less, sometimes none.

And the artists complaining of getting screwed need to re-negotiate with their labels, who are using the artist catalogue as leverage to;

obtain high license fees from the streaming service

obtain a share/stake of the streaming service, so when it goes public the labels cash in

Especially when the record label and publishing company in question, Victory Records are well-known for not paying artists their royalties. I am sure there are accounting issues with the royalty payment system and there are many reasons for that.

A report from Berklee College of Music estimates that 20 to 50 % of royalty payments get lost in transition and do not make it to the ones who created the songs. The same report puts a $45 billion value to the music industry. When you do the math, you realise that is a pretty big sum that just goes missing.

As the Fusion article states;“Companies that stream music—like Spotify, Pandora or Apple—pay artists in exchange for playing their songs. Somewhere between the company cutting a check to cover the music and the artist— be they a performer, a songwriter, a sound engineer, or a producer— depositing money into a checking account, dollars are disappearing.”

It’s a well-known fact that the record labels are very creative when it comes to their accounting, and until the industry increases its transparency, there will always be misuse of royalties.

In case you don’t want to click on the link, it is the story of James Blunt, who claimed via Twitter that he gets paid £00.0004499368 per stream (converted to dollars he’s getting $0.0006968992 per stream). If it relates to Spotify streams only, then the final payment that Blunt is finally getting is pretty low and is further evidence of the record label and collection agencies skimming a lot from the initial payment.

And where does all of this leave the music fan, cranky as hell as they hear over and over again how they need to pay for music, when in fact we overpay for concert tickets and merchandise. A successful act today is making more dollars than they’ve ever made, however it is less from recordings. And we are looking for ease of use first and foremost. That’s how Spotify killed P2P to begin with, through convenience. And convenience is going to generate a lot of money for the recording industry. Let’s hope they put that money back to the people who deserve it, the creators.

I have been on a Sons Of Anarchy binge lately. Just recently I finished Season 2 and the final episode had an unbelievable piece of music that complemented and enhanced the desperation of the final scenes. You need to see it, to understand what I mean.

Of course I wanted to know more about this piece of music. So I Google “Sons of Anarchy Season 2 Music”. I come across a WIKIA page that shows me each episode and the songs that played on each episode. I click on the final episode of Season 2 and I see that the last song listed is from a band called “Straylight Run” and that the song is called “Hands In The Sky”.

So I go onto YouTube, type in the band name, and there it is. I came across 16 videos with a combined play count of 1,498,818. Spotify streams have the count as 110,507.

I want to go deeper, because that is what we do, when we come across something that connects with us.

The song was released on an EP, called “Prepare To Be Wrong” from 2005. God damn. I am hearing this song in 2013. That is 8 years after its release.

The audience (both legal and illegal) who watched “Sons Of Anarchy” on December 1, 2009 heard the song for the first time. If you dig deeper you will see that the actual song hit YouTube from December 4, 2009, which is right after the “Sons Of Anarchy” episode.

By February 2010, the band went on indefinite hiatus due to money complications. This is strange, especially when “Hands In The Sky (Big Shot)” was doing the rounds courtesy of the TV show.

Of course, with Victory Records being the label that released the EP, it would be safe to assume that Victory Records would have kept their reputation intact by pocketing handsomely and not giving a cent to Straylight Run.

Straylight Run started off on Victory Records due to a contract that John Nolan and Shaun Cooper had with the label courtesy of their other band “Taking Back Sunday.” That contract was fulfilled with the EP release in 2005. Then Universal Republic picked them up for their 2007 release “The Needles The Space” only to be dropped when vocalist, guitarist and pianist Michelle DaRosa left. They went all independent for their next two EP releases and then called it a day after that.

Great music will always be found. “Hands In The Sky (Big Shot)” will live on forever. It is now a part of pop culture. It really captured the desperation of the scenes and now I can’t stop playing the song, along with Neil Young’s “Hey, Hey, My, My” which was used to close Season 3.

Q: Why do I not have my record yet? I totally want it.
A: Simple – Victory Records has refused to send us any of Streetlight’s new album. Without that – we can not send out pre-orders. Classy move. Read on for more information about your order.

The above is on the front page of Streetlight Manifesto web site. For some reason Victory Records always ends up in the news.

It first began in August 2006, when Hawthorne Heights filed a lawsuit against Victory Records, accusing the label of creative accounting practices, unpaid royalties and for damaging the band’s reputation and relationship with their fans.

By June, 2008, Hawthorne Heights had dropped the lawsuit and by August 2008, released their third album. I enjoyed the first two Hawthorne Heights album, however the third album was a disappointment. By the time Skeletons was released on Wind Up Records, it was all over for Hawthorne Heights.

In 2011, A Day To Remember also filed a suit against Victory Records for unpaid royalties. Victory Records is saying that the issue isn’t about unpaid royalties, and that the real issue is the band wanting out of their 5 album contract.

So back to Victory Records and Streetlight Manifesto. The relationship is so strained, that Streetlight Manifesto even told their fans to download their album from other free sources, to not purchase the album from any physical and online retailers and to only purchase merchandise from the band’s website.

The loser in all of this is the fan. What Victory Records fail to realise is that fans support bands. If bands have fan support, then Victory Records will make money as well. No one buys music because Victory or Century Media or any other label released it. They buy music because a BAND released it.